TLDR
- Q3 revenue reached $5.95B, representing a 251% year-over-year increase and surpassing the $4.73B analyst forecast.
- The company delivered adjusted EPS of $23.41, crushing the $14.66 consensus estimate by $8.75.
- Shares jumped initially following the earnings release but subsequently fell approximately 5% during Friday’s premarket session.
- Datacenter segment revenue exploded 233% sequentially, fueled by a 137% pricing increase across all business units.
- Q4 revenue guidance of $7.75B–$8.25B significantly exceeds Wall Street’s $6.65B expectation.
SanDisk delivered what may be one of its most impressive quarterly performances on Thursday, with both revenue and profits significantly exceeding analyst projections. Yet investors sent shares down approximately 5% in Friday’s premarket session, despite management’s optimistic forward guidance.
Third-quarter revenue reached $5.95 billion, marking a 251% increase compared to the same period last year. This figure substantially exceeded the Street’s $4.73 billion estimate. Meanwhile, adjusted earnings per share landed at $23.41, demolishing the consensus forecast of $14.66 by nearly $9.
Prior to the pullback, the stock had approached $1,096.51, hovering near its 52-week peak of $1,115.
The datacenter business emerged as the primary growth catalyst. Revenue from this segment skyrocketed 233% on a sequential basis, propelled by a 137% pricing improvement spanning all product categories. While consumer and client divisions experienced declines, the datacenter surge more than compensated for these weaknesses.
CEO David Goeckeler characterized the quarter as “a fundamental inflection point” for the organization. He emphasized the strategic pivot toward premium end markets, with datacenter operations spearheading this transition.
Long-Term Agreements Provide Revenue Certainty
SanDisk executed five multi-year contracts during and immediately following the quarter. Three agreements were finalized within Q3, while two additional deals closed in Q4. The trio of Q3 contracts alone are projected to deliver a minimum of $42 billion in guaranteed revenue, recognized on a quarterly basis.
The company has also established downside protection mechanisms. SanDisk secured $11 billion in guaranteed payments should customers fail to meet their capacity obligations — providing critical insurance against potential market volatility.
Pricing power has emerged as a consistent advantage. Supply constraints in NAND memory driven by AI demand have enabled SanDisk to implement aggressive price increases, and the forthcoming BiCS8-based QLC enterprise SSD launch is anticipated to sustain this favorable pricing environment.
Wall Street Response
Analysts moved quickly to revise their price targets upward.
BofA Securities elevated its price objective to $1,550 from $1,080, reaffirming its Buy recommendation. The firm highlighted valuation opportunity, underappreciated joint venture holdings, and anticipated enterprise SSD market share expansion in 2026.
Raymond James increased its target to $1,470 from $725, describing the datacenter transformation as “clear” and commending the company’s strengthening customer partnerships.
Mizuho boosted its price target to $1,220 from $1,000 while maintaining its Outperform rating.
Despite widespread bullishness, InvestingPro noted the stock appears overvalued compared to its Fair Value calculation — although analysts project full-year earnings of $44.72 per share.
For the fourth quarter, SanDisk provided revenue guidance of $7.75B to $8.25B, with non-GAAP diluted EPS anticipated between $30.00 and $33.00. This outlook implies approximately 35% sequential revenue expansion. The company expects Q4 gross margins to reach around 80%, exceeding the 74% consensus and representing a roughly 5,400 basis point year-over-year improvement.
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